The Long View For Scrooge McDuck Investors

I write this article in mind for those of you who have your wealth primarily concentrated in broad-based index funds, or have created portfolios that are so totally diversified across sectors and industries that you have taken the Scrooge McDuck approach to investing. Instead of focusing on the success of certain companies to deliver returns, you have chosen to rely upon the general growth of economic activity to build wealth.

When events like the financial crisis, the sequester, Brexit, and so on occur, people pause and wonder: What if the post WWII boom in the global stock market was the result of a perfect tailwind consisting of rebuilding, population growth, global trade advancements, and rapid technology advancements that delivered returns far above what can be expected over the coming twenty to fifty years?

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Oil Stock Trading: This Is Going To End Poorly

Last month, the Wall Street Journal put out an article titled “The New Oil Traders: Moms and Millennials” that chronicled the daily experience for stay-at-home moms and people in the 18-35 age range that log into their account each day and make trades on the price of oil.

Assuming it can be done, the transaction and social costs are extremely high: These people are paying $20 per day, sometimes more, to make oil and oil stock trades. Assuming that they are entering and exiting their positions 5 times (e.g. ten fees for a round-trip transaction), then we are talking about a hobby that costs $5,200 per year.

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